Comparing to its competitor, Nestle had lower cost of goods sold as a percentage of sales. Consequently, Nestle earned higher gross margin than Kraft Foods. Nestle spent relatively the same porting of selling and administrative expense (as percentage of sales) between 2008 to 2010 and it was higher than Kraft Foods about 2 times. This can be explained by intensive differentiated strategy to build brand image and gain recognition in the market. Net interest expenses of Nestle kept changing during this period, however it was lower than Kraft Foods.

In addition, Tax expense of Nestle didn’t change significantly during 2008-2010. Kraft Foods’s taxes as a percentage of sales were lower than Nestle because their pretax profit was lower. Net income of Nestle increased dramatically from 9. 70% to 31. 20% in 2010, this influenced by the profit on disposal of Alcon (another business of Nestle which was closed the sale in August 2010). This profit was added to other income in income statement. In conclusion, Nestle’s net income was higher than those of Kraft Foods, generally because it was better in controlling cost of goods sold.